By Aatreyee Dasgupta and Kannaki Deka
(Reuters) -Vacation property operator Hilton Grand Vacations (NYSE:) said on Monday it would buy peer Bluegreen Vacations (NYSE:) in a $1.5 billion deal including debt, to get more customers for its timeshares and expand its offerings.
Under the deal terms, shareholders of Bluegreen Vacations will get $75 in cash for each share held, more than double the stock’s closing price on Friday, valuing the company at $1.28 billion.
The deal comes at a time when high inflation is beginning to weigh on domestic travel in the United States, following a surge in demand when COVID-related lockdowns were lifted.
Both Hilton Grand and Bluegreen Vacations market and sell timeshares, or vacation ownership interests – a model where multiple owners have exclusive use of a property for a period of time.
“One of the major challenges with an independent Vacation Ownership company like BVH is that they do not have a well-recognized brand like HGV (Hilton) does and subsequently customer acquisition cost is significantly higher,” said Truist Securities analysts in a note.
Shares of Bluegreen Vacations more than doubled to $73.1 in morning trade, while shares of Hilton Grand were down 8.7%.
The deal is expected to close during the first half of 2024 and will increase Hilton Grand’s membership base to more than 740,000, from more than 525,000, and its resort portfolio from 150 to nearly 200 properties.
It will also expand Hilton’s presence along the U.S. East Coast while adding a number of outdoor and ski destinations.
Hilton Grand, which was spun off into a publicly traded company in 2017, also said it had signed an exclusive 10-year marketing agreement with outdoor retailer Bass Pro Shops.
Separately, the company cut its 2023 adjusted core earnings forecast to between $1 billion and $1.02 billion, from $1.09 billion to $1.12 billion earlier.
Credit Suisse Securities and Wells Fargo are acting as financial advisors to Bluegreen Vacations, and BofA Securities is acting as the exclusive financial advisor for Hilton Grand Vacations.
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